Organisational Structure
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Transcript of Organisational Structure
1Introduction SegmentalsFinancials Group Outlook
Organisational Structure
Bidfreight Bidserv Bidvest Europe Bidvest Australasia
Bidfood
Bid AutoBidpaper Plus
Bid Industrial & Commercial
Products
Bid Prop Corporate
2Introduction SegmentalsFinancials Group Outlook
Historic Performance
17% CAGR over 5 years
HEPS
215.9 243.2 248.0 302.7368.6
452.4216.9 220.3296.0
353.7436.0
0
200
400
600
800
1000
2002 2003 2004 2005 2006 H12007
cp
s
1H 2H
17% CAGR over 5 years
DPS
90.0 108.0 113.4 133.8162.0
198.0100.0112.0
136.8172.2
207.0
0
100
200
300
400
2002 2003 2004 2005 2006 H12007
cps
1H 2H
Annualised Returns
49 51 53 54
25 2731 32
0
10
20
30
40
50
60
2003 2004 2005 2006
%
ROFE ROE
4.5% 4.4%4.7%
4.4%4.9%
5.2%4.9%
4.8%4.8%
4.9%
Trading profit & margins
0
1000
2000
3000
4000
2003 2004 2005 2006 H1 2007
Rm
1H 2H
4.5% 4.4%4.7%4.9%
5.2%4.9%
4.8%
5.2%
4.3%
Unaudited ResultsUnaudited Results
For the six months endedDecember 31 2006
4Introduction SegmentalsFinancials Group Outlook
Agenda
Introduction & Overview
Financial Results
Outlook
Appendices: Appendix 1: Segmental Outlook Appendix 2: Divisional Review
Introduction & OverviewBrian Joffe
Introduction SegmentalsFinancials Group Outlook
6Introduction SegmentalsFinancials Group Outlook
H1 2007 Highlights
Introduction
► Slightly disappointing result relative to Bidvest expectation
►23% growth in operating profit (21% organic)
►Flat margin despite contribution mix (Deli XL contributed 7cps for the full 6 months vs 3cps for 3 months in the previous period)
►19% avg exchange rate depreciation (Sterling)
► 26% increase in Diluted HEPS, assisted by R1,4bn Dinatla buyback as indicated in September 2006
►Benefits from F2006 group re-organisation: Businesses re-energised under new management, eg. Travel Realignment of group competencies, eg. paper conversion companies
in Bidpaper Plus
7Introduction SegmentalsFinancials Group Outlook
H1 2007 results summary
Introduction
Revenue +25% to R47,9bn
Operating Profit +23% to R2,1bn
Headline earnings +23% to R1,4bn
HEPS +23% to 452,4cps
Diluted HEPS +26% to 440,3cps
DPS +22% to 198,0cps
ROFE 45.8% in H1 2007 vs 48.1% in H1 2006
8Introduction SegmentalsFinancials Group Outlook
Segments at the forefront of performance
Segment H12006 % ch. H1 2007 H1 2006 % ch. H1 2007
Bidserv 2 256,8 +14.3+14.3 2 580,5 260,5 +17,3+17,3 305,6
Bidvest Australasia
3 387,3 +22.0+22.0 4 131,0 108,8 +43.9+43.9 156,5
Bid Industrial and Commercial Products
3 199,5 +30.6+30.6 4 177,2 183,3 +75.7+75.7 322,2
Bid Auto 8 315,1 +15.9+15.9 9 640,2 290,2 +22.3+22.3 355,0
Revenue (Rm) Trading Profit (Rm)
Introduction
9Introduction SegmentalsFinancials Group Outlook
▶ Bidserv:Bidserv: up 17%, driven by strong results out of TMS, Top Turf, Aviation, Bid Travel and Rennies Bank
▶ Bidvest Australasia:Bidvest Australasia: up 44% in ZAR and 25% in AUD, driven organically (Melbourne & Sydney showing promise)
▶ Bid Industrial and Commercial products:Bid Industrial and Commercial products: up 76%, driven by Voltex and Office Products (marked improvement from Waltons Gauteng)
▶ Bid Auto:Bid Auto: up 22%, driven by a 40% increase in Financial Services and an 18% increase in Motor
Segments at the forefront of trading performance
Introduction
10Introduction SegmentalsFinancials Group Outlook
Segments holding their own
Segment H12006 % ch. H1 2007 H1 2006 % ch. H1 2007
Bidfreight 7 687,2 +24.4+24.4 9 561, 5 250,0 +11.6+11.6 279,0
Bidvest Europe 10 366,0 +44.9+44.9 15 016,6 286,3 +19.2+19.2 341,2
Bidfood 1 751,1 +18.0+18.0 2 065,6 160,8 +4.2+4.2 167,5
Bidpaper Plus 871,4 +12.0+12.0 975,8 103,5 +10.9+10.9 114,8
Revenue (Rm) Trading Profit (Rm)
Introduction
11Introduction SegmentalsFinancials Group Outlook
▶ Bidfreight:Bidfreight: up 12%, profit growth below revenue growth due to lower volumes in Bulk, Ports & Distribution
▶ Bidvest Europe:Bidvest Europe: up 19% in ZAR; flat in sterling; MOD impacts but Deli XL and Horeca did commendably well
▶ Bidfood:Bidfood: up 4%, masks some notably good performances but Bidbake suffers sharp margin erosion
▶ Bidpaper Plus:Bidpaper Plus: up 11%, respectable result with Lithotech, Printing & Conversion, and the DRC project worthy of mention
Segments holding their own in trading performance
Introduction
Financial ResultsDavid Cleasby
Introduction Segmentals Group OutlookFinancials
13Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
Real price and volume increases Includes full 6-month contribution of R4,2bn from Deli XL
vs 3 months in previous period (R2,2bn) 18% excluding exchange translation
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
14Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
NOTE:NOTE: Foreign food businesses = 23.9% (R497,7m) contribution to Trading Income vs 23.2% (R395,1) in H1 2006
Trading margins
H1 2007 H1 2006
Local 5.3% 5.3% BidFreight (Safcor) and Bidfood (BidBake) lower
Offshore 2.6% 2.9% Deli XL’s contribution at lower innate margins; pressure on 3663 CD and loss of MOD in UK
Group 4.3% 4.4%
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
15Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
Offshore interest of R28,2m vs local interest of R196,8m Zero net debt offshore vs local net debt of R4,2bn Strong cash flows have enabled offshore debt repayment,
therefore proportionately more debt in SA vs offshore 200 b.p. prime rate increase
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
Net finance expense (225,0) +36.9+36.9 (164,4) (221,3) +34.6
16Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
Associates: Tiger Wheels, Enviroserv (+38% HEPS), Compu-clearing & other
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
Net finance expense (225,0) +36.9+36.9 (164,4) (221,3) +34.6
Associate Income 37,7 +60.4+60.4 23,5 37,7 +60.4
17Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
Effective tax rates
H1 2007
H1 2006
Local 28.3% 28.4% No material change
Offshore 26.5% 24.6% F2006 low due to credits from Dartline sale
Group 27.8% 27.3%
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
Net finance expense (225,0) +36.9+36.9 (164,4) (221,3) +34.6
Associate Income 37,7 +60.4+60.4 23,5 37,7 +60.4
Taxation (519,1) +23.4+23.4 (420,6) (499,4) +19.9
18Introduction SegmentalsFinancials Group Outlook
Consolidated Income Statement
Financials
Namsov ↓ Versalec ↑ BidAuto ↑
Avg
R/£13.75
Avg
R/£ 11.56
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
Net finance expense (225,0) +36.9+36.9 (164,4) (221,3) +34.6
Associate Income 37,7 +60.4+60.4 23,5 37,7 +60.4
Taxation (519,1) +23.4+23.4 (420,6) (499,4) +19.9
Minority interests (28,3) -3.1-3.1 (29,2) (28,8) -1.4
19Introduction SegmentalsFinancials Group Outlook
Rm’s H1 2007 % ch H1 2006 H1 2007 % ch
Revenue 47 871,9 +25.2+25.2 38 240,1 45 025,2 +17.7+17.7
Trading profit 2 085,7
+22.4+22.4 1 703,8
2063,4 +19.5
Net finance expense (225,0) +36.9+36.9 (164,4) (221,3) +34.6
Associate Income 37,7 +60.4+60.4 23,5 37,7 +60.4
Taxation (519,1) +23.4+23.4 (420,6) (499,4) +19.9
Minority interests (28,3) -3.1-3.1 (29,2) (28,8) -1.4
Headline earnings 1 355,1 +22.7+22.7 1 104,2 1 304,6 +18.2
HEPS (cents) 452,4 +22.7+22.7 368,6 435,5 +18.2
Diluted HEPS (cents) 440,3 +25.8+25.8 350,0
DPS (cents) 198,0 +22.2+22.2 162,0
Consolidated Income Statement
Avg
R/£13.75
Avg
R/£ 11.56
Financials
Six months ended December 31 2006 H1 2007 in constant currency
(R/£ 11.56)
HEPS - Total weighted avg shares in issue of 299 566: Purchased 18m shares from Dinatla on 12/12/06 at avg price of R79,38 (vs R60,00 received on 18m options)
DPSDistribution policy = +/- 2x covered
20Introduction SegmentalsFinancials Group Outlook
84
-746
-1304
-628
-703
-178
-2306
2629
-3500 -2500 -1500 -500 500 1500 2500
Cash generated from operations
Working capital utilised
Net finance charges
Taxation
Distributions
Cash effects of investment activities
Cash effects of financing activities
Currency adjustments
Consolidated Cash Flow Statement – Rm’s
Financials
Six months ended December 31 2006
Working capital: Working capital investment required to fund growth, mainly McCarthy, Voltex & Office Additional working capital invested not generating additional returns yet General seasonality
OEM cycle New vehicle registrations Builders’ annual shutdown
21Introduction SegmentalsFinancials Group Outlook
Bidvest net working capital flows vs cash generated - Rbn
Financials
1.11.4
-1.1
0.9
2.0 2.2 2.2
-1.2
-2.3
-0.7
1.51.8 1.8
2.6
-3
-2
-1
0
1
2
3
4
H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007
Net working capital Cash generated by operations
Net working capital cycle peaks in first half (December) each year
22Introduction SegmentalsFinancials Group Outlook
Gearing
Financials
Gearing capacity: Balance sheet progressively being better utilisedInterest cover of 9.3x; room to decrease to 5-6x if requiredGrowth into more activities requiring financing, eg. fleet business
2.4
4.2
1.01.5
3.0
11.6 11.410.3 10.7
9.3
0
1
2
3
4
5
0
2
4
6
8
10
12
14
Net interest-bearing debt (Rbn) Interest cover (x)
Target interest cover range
H1 2005 F2005 H1 2006 F2006 H1 2007
Group OutlookBrian Joffe
Introduction Financials Group Group Outlook
24Introduction SegmentalsFinancials Group Outlook
Other matters
BEE Dinatla refinancing Alignment with new BBBEE codes Ongoing operational focus on transformation
Strategic Investments Opportunistic & Strategic – build entrepreneurial, strategic stakes
from time to time in companies with activities aligned to Bidvest’s activities
Group Outlook
25Introduction SegmentalsFinancials Group Outlook
GDP growth:GDP growth: Expected to remain good in all markets
Relative rand weakness:Relative rand weakness: (vs GBP and AUD in H1 2007) is positive on translation (quarter of earnings) and overall neutral to positive for South African trading business in medium term
Mild price inflation:Mild price inflation: Apparent across all markets; upward pressure on wage and distribution costs and intense competition reinforces efforts to avert margin squeeze
Upward phase of interest rate cycle:Upward phase of interest rate cycle: Experienced in all geographies served; countered by relatively positive operating conditions
Consumer spending:Consumer spending: General confidence levels remain encouraging
Benefit from infrastructure spend:Benefit from infrastructure spend: (incl. multiplier benefits) should not be underestimated
SA has experienced none of the extreme economic volatility apparent in earlier times and we see a relatively settled trading outlook
Bidvest GroupBidvest Group - sensitivity to anticipated economic variables
Group Segmentals
OVERALL EFFECT: BROADLY POSITIVEOVERALL EFFECT: BROADLY POSITIVE
26Introduction SegmentalsFinancials Group Outlook
Prospects
Ongoing review of low-return assets
Bidvest Namibia almost born
Benefits of group-wide capex yet to be fully realised
Value extract through group procurement
Focus on organic and acquisitive growth
Within Africa: exploit diverse opportunities
Internationally: food services business expansion
Management confident of delivering above-Management confident of delivering above-average returns and growth for F2007average returns and growth for F2007
Group Outlook